Tri-City financials

Tri-City Healthcare District CEO Larry Anderson was winning awards as recently as February for “the remarkable financial turnaround at the Oceanside Hospital,” as a news release put it.

Shortly after, the public hospital agency’s numbers started showing signs that the turnaround is losing steam.

The agency — which serves Carlsbad, Oceanside and Vista — has lost money two out of the past five months. In four of the past five months, the district failed to meet its profit projections.

The one recent month that Tri-City did meet its profit projections, July, the hospital was credited $1 million in federal reimbursements for installing an electronic medical records system.

The hospital says it will need to make $25 million in profit in the fiscal year that started July 1 to kick-start a $593 million renovation and expansion of its campus — critical to competing with the neighboring Palomar Health system and its new $1 billion hospital.

If the numbers for the remainder of the fiscal year remain the same as the start, the hospital is on pace for about $11 million in profit.

Officials note that the hospital is still making money, and they are not backing off their forecast.

“At this stage of new fiscal year, we have every intention of meeting our goal,” Tri-City Chief Financial Officer Alex Yu said. “Nothing happening now gives us pause for concern in meeting that goal.”

One local expert said that Tri-City’s revenue growth has bucked national trends, as tepid economic growth, declining patient counts and cuts to federal Medicare funding have put pressures on hospitals’ revenue stream.

The hospital faces hurdles if it is to keep up the profit record set by Anderson -- a $16.2 million profit in fiscal year 2011.

“Because this large increase is counter to the minimal increases experienced by the local, regional and national trend, one must question whether this is sustainable,” said Nathan Kaufman, a San Diego-based hospital industry consultant.

Kaufman added that national statistics indicate that stand-alone hospitals like Tri-City are facing more pressure than hospitals in larger systems, such as Scripps and Sharp.

“Since there is clear industry consensus that growing revenues will be challenging, I am not surprised that a financial plan based on growth in revenue is not being achieved,” he said.

The hospital has seen lower patient volumes four of the past five months, measured against last year’s patient volume and its projections for this year.

Hospital officials say business is traditionally lower during the spring and summer months, due to a combination of doctors taking vacations and the fall and winter traditionally being cold and flu season.

Those seasonal issues should be built into the district’s budget, said Tri-City board member Randy Horton, who has been critical of the hospital’s administration in the past.

“Even though this is the hospital’s weaker months, we’ve still been missing our projections by pretty big margins,” Horton said.

Board Chairwoman RoseMarie Reno did not return two calls for comment.

Amid early concerns about the profit situation, the board in July delayed a potential raise for Anderson, who is paid $515,000 a year plus bonuses and benefits. The issue has not resurfaced.

Yu said the hospital’s underlying health is still better than it was in 2008, on the eve of Anderson’s taking reins as CEO.

The hospital has been able to keep its revenue up despite the lower number of patients by treating more serious cases, Yu said. In July alone, the hospital treated nine open heart surgeries.

He noted that while profit has not been as robust as in recent years, revenue still continues to grow. The hospital has seen its operating revenue increase 6.7 percent compared to the same time last year.

Expenses have risen as a result of increased staffing levels and equipment purchases, evidence of the district’s commitment to good patient care, Yu added.

“This hospital for years was undercapitalized,” Yu said.

Tri-City officials said the hospital will launch several initiatives it hopes will cut costs, including a pilot program that it hopes will reduce the number of charity-care patients by monitoring their vitals remotely and intervening before the patient ending up in the emergency room.

Yu said that there are upfront costs of about $500 per patient to start the program, but the hospital expects that it will save hundreds of thousands, if not, millions of dollars in emergency-room costs.